COVID-19 & Mineral Rights Value

When valuable oil and gas reserves are discovered beneath the land’s surface, it often leads to a financial windfall. Debts can be paid off, loved ones can be supported, and personal interests can be pursued. Outside factors such as COVID-19 can severely degrade or even outright destroy mineral values, however, changing a financial outlook seemingly overnight.

Momentum Minerals is passionate about the fiscal position of mineral rights owners throughout the United States of America. As a leading mineral and royalty acquisition company, we understand the impact of global pandemics on crude oil demand and help landowners get the most for their minerals.

Mineral Rights Explained

While many countries allow individuals to purchase land, ownership rights only extend to the surface. In the United States, however, people who buy land also have the right to develop and exploit that property, including any natural resources found beneath its surface. Ownership of underground assets is commonly called mineral rights or mineral estates.

The term mineral rights generally indicates to the authority to explore, develop, extract, and market subsurface minerals. They regularly include crude oil, natural gas, coal, precious metals, non-precious or semi-precious metals, specialty or rare earth elements, and other solid materials like clay, gravel, sand, and stone.

When the property you own is found to contain valuable metals, minerals, or rare elements, it’s potentially far more valuable than just land to enjoy. It can become a revenue stream that leads to the following:

-Steady income source

-Financial security

-Estate planning

-Eliminates uncertainty

-Peace of mind

Generally speaking, there are two common paths for landowners seeking to maximize their property’s mineral rights: leasing and selling.

Leasing means that a company will offer a contract to lease the land and potentially drill for minerals. If minerals are found, the landowner receives a monthly royalty payment over an agreed-upon period. Leasing enables the landowner to earn more money if mineral prices increase over time. On the other hand, a variety of factors can cause the value of subsurface minerals to swing wildly, and the lessor could potentially lose money over time.

The appeal of selling mineral rights is a simple, stress-free experience. The landowner receives a sizeable lump-sum payment and doesn’t have to worry about receiving the correct royalty fee from the lessor for extracted minerals. They are also protected from outside factors that negatively impact mineral prices, which can be financially catastrophic.

COVID-19’s Impact on Mineral Rights

A driving force of mineral value is product utilization. For oil and gas, that means the consumption of crude oil and natural gas for transportation, manufacturing, electricity, and heating fuels, to name a few.

COVID-19 has severely curtailed demand for crude oil. First identified during an investigation into an outbreak in Wuhan, China, the coronavirus is a potentially dangerous respiratory illness that can spread from person to person.

As domestic and foreign governments announce stay-at-home orders, travel restrictions, and shutter businesses or industries in an attempt to curb virus transmission, crude oil stockpiles have grown to record highs. In contrast, usage has plummeted to extreme lows. This so-called demand destruction has spurred some industry analysts to forecast the possibility of oil prices dropping to or even below zero dollars. For mineral rights owners, this means:

-Severe mineral rights value degradation

-Lower or zero royalty payments

-Bleak financial outlook

During these trying times, the best way for property owners to maximize the value of their mineral rights is to partner with the reputable, client-friendly minerals acquisition specialists at Momentum Minerals. We buy mineral rights at competitive prices, taking care of all the details for the mineral rights owner.

On Your Side

Momentum Minerals is a mineral and royalty acquisition company headquartered in Houston, Texas. By combining decades of mineral rights assessing experience with a customer-first mindset, we have the expertise necessary to evaluate mineral assets accurately.

Backed by one of the largest alternative investment managers serving many of the world’s most prominent institutional investors, our company can offer competitive payments for assets and quickly close transactions of any size. Areas we serve include: